Term Insurance Plans
The most important insurance plan is term insurance plan. Term insurance is the oldest form of insurance and is the least expensive plan to cover the risk of death. term plan is a no return plan just like your mediclaim or car insurance cover. If claim comes with in the insured period, the nominee will get the full sum assured or otherwise there is no maturity value or cash value of the plan. It provides coverage for a specific period or term say 10 to 30 years. It is the simple type of life insurance and easiest to understand.
You need not have to calculate the charges and returns in this plan, as you know from the day one that premium paid by you is not going to come back. One should not make the mistake of taking term insurance premium as an expense but treat this as must for the protection and security of your loved ones. You need to compare the premiums before selecting the right company and also have to go through the exclusions in the plan. This will help you in selecting the right term plan. Looking at all the facts available, term insurance is the obvious choice for life insurance.
Term policy is now available both in off line and online mode. HDFC click2protect, ICICI iprotect, Aviva ilife and Kotak preferred are the online term plans. LIC Amulya Jeevan, Aegon religare term plan, SBI smart shield, Bajaj Allianz Pure term plans are few offline terms available in the market. One should look at the best term insurance plan in India depending on age, income and life insurance need. The Online premiums are cheaper than offline term plans and are quite easy to avail also. In the recent past Online term plans have gained immense popularity due to their easy access.
Nowadays most of the Insurance Companies are offering online term plans still it is quite a task to make the right choice. That is why mostly customers resort to consulting their agent as they either do not have access to Internet or are not comfortable about making online payments. The agents do not give proper advice to the clients and run behind commissions. It is more important before buying a life insurance plan that one should know how much insurance cover you require. Also, you should know and be aware of the features of the insurance plan.
Neither Agent explains the plan in details to the customer nor have investors enough time to assess the plan. Customers should visit apnapaisa.com to get the right information before selecting the right product. There are basically three types of insurance plans available in the market, Traditional or Conventional Plans, Unit Linked Insurance Plans and Term Insurance Plans.
Traditional plans are mostly saving products and give guarantee of sum assured and also give bonus every year depending on the profitability of the company. The investment options are with the insurer and they take a call where to invest the gain knowledge on the plans available in the market. ULIP plans are market related and risk of investment is born by the policyholders. Policyholders have the right to choose the investment option available in the plan i.e. from 100 % in debt to 100% in equity. ULIP products are more complex than Traditional plans.
Term Insurance Benefits
Term insurance offers few of those advantages that you can’t get with traditional life insurance policies. It has several benefits.
- Term insurance is the cheapest form of insurance.
- Select the length of the term for which you would like coverage, up to 35 years.
- Payments are fixed and do not increase during your term period.
- In case of an untimely death, dependents will receive the benefit amount specified in the insurance agreement.
- You can customize term life insurance with the addition of riders, such as Child, Waiver of Premium, or Accidental Death.
- Another popular feature of term insurance is return of premium. It is a little bit higher than your regular term life insurance. But they carry the benefit of refunding what you have paid for 100 percent.
Term Insurance Claims
The death of the insured needs to be informed to the insurance company either directly or through the insurance agent who sold the term insurance policy to the insured. Contact details are usually given on the insurer’s official website. The insurance companies have death claim forms that need to be filled up and submitted to them along with a list of documents.
Once the insurance company is done with it’s survey, it will pay the nominee the sum assured.
If the insurer is satisfied with a claim, it pays the settlement; if there is doubt, the insurer may ask the claimant to submit more documents.
Term Insurance Exclusions
If the insured person commits suicide, whether sane or insane, within one year from the date of commencement of a term policy, the cover will become void, i.e. the nominee cannot claim the sum assured. Only the premiums paid up to the date of death will be refunded; after deducting the expenses incurred by the insurer for issuing the cover.
Term Insurance Riders
A term insurance rider is an attachment or amendment to an insurance policy that adds to the coverage in the policy. For instance, a waiver of premium rider will allow you to continue your term life coverage for a limited time if you cannot pay the premium.
- Riders available for term insurance:
- Critical illness
- Waiver of premium
- Accidental death and dismemberment
- Accelerated sum assured
- Partial and permanent disability
- Hospital cash
Term Insurance Tax
The income tax benefits of paying towards term insurance are in the form of deductions as well as exemptions.
You can deduct from your taxable income to a total of Rs. 1 lakh in certain instances, such as your insurance payments from gross income under Section 80C of the Income Tax Act.
You can also seek exemption from gross income under Section 10 (10) D for any sum received from insurance policy as maturity proceeds, death benefits are exempt from tax.
For insurance policies issued after 01 April 2003, where the premium payable for any of the years during the term of the policy exceeds 20% of the sum assured, the insured will not be eligible for Sec 10(10) D benefit.